<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
IGI, Inc.
...................................................................
(Name of Registrant as Specified in Its Charter
...................................................................
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
........................................................
2) Aggregate number of securities to which transaction
applies:
........................................................
<PAGE>
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
........................................................
4) Proposed maximum aggregate value of transaction:
........................................................
5) Total fee paid:
........................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the pervious filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
........................................................
2) Form, Schedule or Registration Statement No.:
........................................................
3) Filing Party:
........................................................
4) Date Filed:
........................................................
<PAGE>
IGI, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of IGI,
Inc., a Delaware corporation (the 'Company'), will be held on Tuesday, May 9,
1995 at 10:00 a.m. at the offices of Hale and Dorr, 60 State Street, Boston,
Massachusetts (the 'Meeting') for the purpose of considering and voting upon the
following matters:
1. To elect nine directors to serve until the next Annual Meeting of
Stockholders.
2. To approve amendments to the Company's 1991 Stock Option Plan (i)
increasing the number of shares of Common Stock authorized for
issuance from 1,200,000 to 1,900,000 shares, (ii) limiting to
100,000 the number of shares for which options may be granted in
any calendar year to any one person and (iii) providing that
options may be granted to consultants and advisors to the Company.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as
independent auditors of the Company for the current fiscal year.
4. To consider and vote upon a stockholder-proposed resolution
relating to the location of the Company's annual meetings.
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on Friday, March 24,
1995 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting and at any adjournments thereof.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1994, which contains financial statements and other information of
interest to stockholders, accompanies this Notice and the enclosed Proxy
Statement.
By Order of the Board of Directors,
HENRY A. MALKASIAN,
Secretary
April 14, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE NEED
BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE>
IGI, INC.
WHEAT ROAD AND LINCOLN AVENUE
BUENA, NEW JERSEY 08310
------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 1995
------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of IGI, Inc. (the 'Company') for use at the
Annual Meeting of Stockholders to be held on Tuesday, May 9, 1995 at 10:00 a.m.
at the offices of Hale and Dorr, 60 State Street, Boston, Massachusetts, and at
any adjournments thereof (the 'Meeting').
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
proposals 1, 2 and 3 set forth in the accompanying Notice of Meeting and against
proposal 4. Any proxy may be revoked by a stockholder at any time before its
exercise by delivery of a written revocation to the Secretary of the Company.
Attendance at the Meeting will not itself be deemed to revoke a Proxy unless the
stockholder gives affirmative notice at the Meeting that the stockholder intends
to revoke the Proxy and vote in person.
Only the record holders of shares of common stock, $.01 par value per
share, of the Company (the 'Common Stock') at the close of business on March 24,
1995 may vote at the Meeting. Each share entitles the record holder to one vote
on each of the matters to be voted upon at the Meeting. On March 24, 1995, there
were 8,923,057 shares of Common Stock outstanding.
The Notice of Meeting, this Proxy Statement, the enclosed Proxy and the
Company's Annual Report for the year ended December 31, 1994 are being mailed to
stockholders on or about April 14, 1995.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of March 15, 1995 with
respect to the beneficial ownership of shares of Common Stock by (i) each person
known to the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) the directors of the Company, (iii) the Chief Executive
Officer and the five executive officers of the Company listed in the 'Summary
Compensation Table' below (collectively, the 'Named Executive Officers') and
(iv) the directors and executive officers of the Company as a group. Unless
otherwise noted, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned by
them.
<TABLE>
<CAPTION>
NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS
- - ------------------------------------------------------------------------------- ----------- ----------
<S> <C> <C>
Edward B. Hager, M.D. ......................................................... 919,500(1) 10.0%
Pinnacle Mountain Farms
Lyndeboro, NH 03082
John P. Gallo ................................................................. 583,397(2) 6.3%
1772 Garwood Lane
Vineland, NJ 08360
Stephen J. Morris ............................................................. 559,435(3) 6.3%
66 Navesink Avenue
Rumson, New Jersey
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS
- - ------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Jane E. Hager ................................................................. 524,500(4) 5.8%
Pinnacle Mountain Farms
Lyndeboro, NH 03082
Henry A. Malkasian............................................................. 383,000(5) 4.2%
David G. Pinosky, M.D.......................................................... 264,900(6) 2.9%
John O. Marsh, Jr.............................................................. 50,000(7) *
Dick Cheney.................................................................... 30,000(8) *
Terrence O'Donnell............................................................. 30,000(8) *
Constantine L. Hampers, M.D.................................................... 23,000(9) *
Donald F.H. Wallach, M.D....................................................... 716 *
Stephen G. Hoch................................................................ 33,750(10) *
Denis M. O'Donnell, M.D........................................................ 25,250(11) *
Lawrence N. Zitto.............................................................. 40,875(12) *
All executive officers and directors, as a group
(16 Persons)................................................................... 3,007,077(13) 29.8%
</TABLE>
- - ------------------
<TABLE>
<S> <C>
* Less than 1% of the Common Stock outstanding.
(1) Includes 295,000 shares which Dr. Hager may acquire pursuant to stock options exercisable within 60 days
after March 15, 1995, but does not include any of the shares (listed below) beneficially owned by Dr. Hager's
wife, Jane E. Hager, as to which Dr. Hager disclaims beneficial ownership.
(2) Includes 295,000 shares which Mr. Gallo may acquire pursuant to stock options exercisable within 60 days
after March 15, 1995.
(3) The information reported is based on a Schedule 13D dated June 13, 1994 and filed with the Securities and
Exchange Commission by Stephen J. Morris. Mr. Morris has sole voting power with respect to 549,400 shares,
shared voting power with respect to 10,035 shares and sole investment power with respect to 559,435 shares.
(4) Includes 500 shares held by Mrs. Hager's father, as to which shares Mrs. Hager exercises voting and
investment control; but does not include any of the shares (listed above) beneficially owned by Dr. Hager, as
to which Mrs. Hager disclaims beneficial ownership. Also includes 100,000 shares which may be acquired
pursuant to stock options exercisable within 60 days after March 15, 1995.
(5) Includes 100,000 shares which may be acquired pursuant to stock options exercisable within 60 days after
March 15, 1995. Also includes 2,000 shares held by Mr. Malkasian's wife. Mr. Malkasian disclaims beneficial
ownership of his wife's shares.
(6) Includes 100,000 shares which may be acquired pursuant to stock options exercisable within 60 days after
March 15, 1995.
(7) Consists of 50,000 shares which may be acquired pursuant to stock options exercisable within 60 days after
March 15, 1995.
(8) Consists of 30,000 shares which may be acquired pursuant to stock options exercisable within 60 days after
March 15, 1995.
(9) Includes 20,000 shares which may be acquired pursuant to stock options exercisable within 60 days after March
15, 1995.
(10) Consists of 33,750 shares which may be acquired pursuant to stock options exercisable within 60 days after
March 15, 1995.
(11) Consists of 25,250 shares which may be acquired pursuant to stock options exercisable within 60 days after
March 15, 1995.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
(12) Includes 25,875 shares which may be acquired pursuant to stock options exercisable within 60 days after March
15, 1995.
(13) Includes 1,176,625 shares which may be acquired pursuant to stock options exercisable within 60 days after
March 15, 1995, 500 shares described in footnote 4, and 2,000 shares described in footnote 5.
</TABLE>
The Company owns 72.4% of the outstanding Class A Common Stock of Molecular
Packaging Systems, Inc. ('MPS'), which in turn owns 100% of the capital stock of
Micro Vesicular Systems, Inc. ('MVS'). The remaining 27.6% of the Class A Common
Stock of MPS is owned by the following: Dr. Donald F.H. Wallach, a former Vice
President of the Company and the former President of MPS and MVS -- 12.2%, Dr.
Hager and trusts for the benefit of Dr. Hager's minor children -- 9.2%, Mr.
Gallo -- 4.2%, and the balance of the shares are held by scientists of the
Company. The Company also owns 100% of the outstanding shares of the Class B
Common Stock of MPS. See 'Certain Relationships and Related Transactions.'
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
'Exchange Act'), requires the Company's directors, executive officers and
holders of more than 10% of the Company's Common Stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
The Company believes that during 1994 its officers, directors and holders of
more than 10% of the Company's Common Stock complied with all Section 16(a)
filing requirements, with the following exceptions. Dr. Wallach, a former Vice
President of the Company and the former President of MPS and MVS, failed to file
on a timely basis a Statement of Changes in Beneficial Ownership on Form 4
reflecting the sale of shares of Common Stock. Dr. Wallach's Annual Statement of
Changes in Beneficial Ownership on Form 5 also reflected three sales of Common
Stock that were not reported earlier on a Form 4.
VOTES REQUIRED
The holders of a majority of the shares of Common Stock outstanding shall
constitute a quorum for the transaction of business at the Meeting. Shares of
Common Stock present in person or represented by proxy (including shares which
abstain or do not vote with respect to one or more of the matters presented for
stockholder approval) will be counted for purposes of determining whether a
quorum exists at the Meeting.
The affirmative vote of the holders of a plurality of the votes cast at the
Meeting is required for the election of directors. The affirmative vote of a
majority of the shares of Common Stock present, or represented, and entitled to
vote is required to approve the amendments to the Company's 1991 Stock Option
Plan. The affirmative vote of the holders of a majority of the shares of Common
Stock cast is required for the ratification of the appointment of Coopers &
Lybrand L.L.P. as independent auditors of the Company and for approval of the
stockholder-proposed resolution relating to the location of the Company's annual
meetings.
Shares which abstain from voting as to a particular matter, and shares held
in 'street name' by brokers or nominees who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes cast in favor of such matter, and also will
not be counted as shares voting on such matter. Accordingly, abstentions and
'broker non-votes' will have no effect on the voting on a matter that requires
the affirmative vote of a certain percentage of the votes cast on the matter.
However, abstentions will be treated as shares that are present, or
represented, and entitled to vote for purposes of determining the number of
shares that are present and entitled to vote with respect to any particular
matter, but will not be counted as a vote in favor of such matter. Accordingly,
an abstention with respect to a matter requiring the vote of a certain
percentage of the shares present, or represented, and entitled to vote has the
same effect as a vote 'against' the matter. Broker non-votes will not be
considered as present and entitled to vote with respect to such a matter and
will thus have no effect on the voting on such matter.
4
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
The persons named as proxies in the accompanying Proxy intend (unless
authority to vote therefor is specifically withheld) to vote for the election of
the nine persons named below as directors to hold office until the next Annual
Meeting of Stockholders and until their respective successors are elected and
qualified. Each nominee is presently serving as a director of the Company and
has consented to being named in this Proxy Statement and to serve if elected. If
any of the nominees becomes unavailable to serve as a director, the persons
named as proxies in the accompanying Proxy may vote the Proxy for substitute
nominees. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve if elected.
The following table sets forth certain information with respect to the
nominees:
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION, OTHER BUSINESS EXPERIENCE
NAME AGE SINCE DURING PAST FIVE YEARS AND OTHER DIRECTORSHIPS
- - ----------------------------------------- ----------- ----------- --------------------------------------------------------
<S> <C> <C> <C>
Edward B. Hager, M.D. ................... 63 1977 Chairman of the Board of Directors and Chief Executive
Officer of IGI, Inc. since 1977; Dr. Hager is the
husband of Jane E. Hager.
John P. Gallo............................ 52 1985 President and Chief Operating Officer of IGI, Inc. since
1985; Vice President of IGI, Inc. from 1983 to 1984;
Vice President of Vineland Laboratories, Inc. and
Evsco Pharmaceutical Corp. from 1973 to 1983.
Henry A. Malkasian....................... 78 1977 Secretary of IGI, Inc.; Member of law firm of Malkasian
& Budge, Wellesley, MA since 1990; Member of the law
firm of Malkasian & Goglia, Wellesley, MA from 1980 to
1990.
Jane E. Hager............................ 49 1977 Chairman of the Board of Directors of JH Development
Corp. (real estate development), Amherst, NH since
1985; President of Prescott Investment Corp. (real
estate development), Lyndeboro, NH since 1991; former
Treasurer and Secretary of IGI, Inc.; Director of
Fleet Bank-NH, Nashua, NH since 1986; Trustee of the
University System of New Hampshire; Director of
Crotched Mountain Rehabilitation Foundation,
Greenfield, NH; Overseer of Dartmouth Mary Hitchcock
Hospital; Incorporator of New Hampshire Charitable
Fund, Concord, NH; Mrs. Hager is the wife of Edward B.
Hager.
David G. Pinosky, M.D. .................. 65 1980 Member of the faculty of the University of Miami School
of Medicine since 1963; Medical Director, Psychiatric
Unit, Palmetto General Hospital, Hialeah, FL since
1986; President, Miami Psychiatric Associates since
1971; Medical Director of Highland Park General
Hospital, Miami, FL from 1971 to 1986.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION, OTHER BUSINESS EXPERIENCE
NAME AGE SINCE DURING PAST FIVE YEARS AND OTHER DIRECTORSHIPS
- - ----------------------------------------- ----------- ----------- --------------------------------------------------------
<S> <C> <C> <C>
John O. Marsh, Jr. ...................... 68 1991 Of Counsel to the law firm of Hazel & Thomas, P.C.,
Falls Church, VA since January 1995 and Member from
1990 through 1994; Chairman of the Reserve Forces
Policy Board since November 1989; Legislative Counsel
to Secretary of Defense, 1989; Secretary of the Army
from 1981 to 1989; Acting Assistant Secretary of
Defense for Special Operations and Low Intensity
Conflict, 1988; Counsellor with Cabinet rank to
President Ford from 1974 to 1977; Assistant for
National Security Affairs to Vice President Ford, from
February 1974 to August 1974; Assistant Secretary of
Defense from 1973 to 1974; U.S. Representative in
Congress from the Seventh District of Virginia from
1963 to 1971 and member of Appropriations Committee
from 1965 to 1971.
Dick Cheney.............................. 54 1993 Senior Fellow at the American Enterprise Institute since
January 1993; Secretary of Defense from March 1989 to
January 1993; United States Representative from
Wyoming from January 1979 to March 1989; Assistant to
the President and White House Chief of Staff under
President Ford from November 1975 to January 1977;
Deputy Assistant to President Ford from 1974 to
November 1975; Vice President of Bradley, Woods and
Company, an investment firm, from 1973 to August 1974;
Director of US West, Inc., Union Pacific Corporation,
Morgan Stanley Group Inc. and Procter & Gamble
Company.
Terrence O'Donnell....................... 51 1993 Member of law firm of Williams & Connolly, Washington,
D.C. since March 1992 and from March 1977 to October
1989; General Counsel of Department of Defense from
October 1989 to March 1992; Special Assistant to
President Ford from August 1974 to January 1977;
Deputy Special Assistant to President Nixon from May
1972 to August 1974.
Constantine L. Hampers, M.D.............. 62 1994 Chairman of the Board of Directors and Chief Executive
Officer of National Medical Care, Inc., a provider of
in-center and home kidney dialysis services and
products, since 1968; Executive Vice President of W.
R. Grace & Co. ('W. R. Grace') since 1991; Director of
Artificial Kidney Services at Peter Bent Brigham
Hospital and Assistant Professor of Medicine at
Harvard University School of Medicine prior to 1968
and for several years thereafter; Director of W. R.
Grace.
</TABLE>
6
<PAGE>
For information relating to shares of the Company owned by each of the
directors, see 'Beneficial Ownership of Common Stock.'
BOARD AND COMMITTEE MEETINGS
The Board of Directors met five times (including a telephone conference
meeting) during 1994. Each of the directors attended at least 75% of the
meetings of the Board of Directors and the committees on which he or she served.
The Board of Directors has an Executive Committee, an Audit Committee, an
Independent Committee of Outside Directors, a Financial Affairs Committee and a
Compensation and Stock Option Committee.
The Executive Committee, whose members are Dr. Hager, Mr. Gallo and Mrs.
Hager, has the authority to exercise the powers of the Board of Directors
between Board meetings. The Audit Committee, whose members are Dr. Pinosky,
Messrs. Marsh and O'Donnell (Chairman) and Mrs. Hager, reviews the audit of the
Company's accounts, monitors the effectiveness of the audit and evaluates the
scope of the audit. The Independent Committee of Outside Directors, whose
members are Drs. Hampers and Pinosky and Messrs. Cheney, Marsh, Malkasian
(Chairman) and O'Donnell, reviews and approves transactions with the Company's
majority-owned subsidiaries. The Financial Affairs Committee, whose members are
Dr. Hampers, Messrs. Cheney, Marsh and O'Donnell and Mrs. Hager (Chairman),
advises management with respect to the investment of the Company's liquid
assets. The Compensation and Stock Option Committee, whose members are Drs.
Hampers and Pinosky and Messrs. Marsh (Chairman), Malkasian and O'Donnell,
reviews and recommends salaries and other compensatory benefits for the
principal officers of the Company and grants stock options to key employees of
the Company and its subsidiaries. During 1994, the Executive Committee met seven
times, the Audit Committee met two times, the Independent Committee of Outside
Directors met three times and the Compensation and Stock Option Committee met
once. The Financial Affairs Committee did not meet during 1994. The Company has
no nominating committee of the Board of Directors.
In May 1990, Dr. Hager, Chairman and Chief Executive Officer of the
Company, entered a modified guilty plea in United States federal court to one
count of aiding and abetting the importation of a single mountain lion pelt
possessed in violation of Mexican law. Also in 1990, Dr. Hampers, a director of
the Company, consented to the entry of a misdemeanor finding and the payment of
a fine in connection with the importation of skins of endangered species in
violation of federal law. The events described above arose out of a 1985 Mexican
hunting trip of Drs. Hager and Hampers.
DIRECTOR COMPENSATION AND STOCK OPTIONS
Each director not employed by the Company receives $2,000 for each meeting
of the Board of Directors he or she attends. See 'Proposal 2 -- Proposed
Amendments to the 1991 Stock Option Plan -- Director Options' for a description
of stock options awarded to the Company's non-employee directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Malkasian is a member of Malkasian & Budge, Wellesley, Massachusetts,
and Mr. Marsh is Of Counsel to Hazel & Thomas, P.C., Falls Church, Virginia.
Both Malkasian & Budge and Hazel & Thomas provided certain legal services to the
Company in 1994.
In October 1989, the Company advanced $200,000 to Dr. Wallach, a former
Vice President of the Company and the former President of each of MPS and MVS,
in connection with Dr. Wallach's purchase of a home. Dr. Wallach issued the
Company a note bearing interest at the prime rate plus 1/4% per annum and
secured by 150 shares of MPS Class A Common Stock. As of March 15, 1995, the
amount of indebtedness outstanding was $196,229, including accrued interest. The
largest amount of indebtedness outstanding under the note since January 1, 1994
was $223,863.
In November 1990, the Company advanced $70,000 to Mr. Gallo, the President
of the Company, for educational expenses of his children. Mr. Gallo issued the
Company a note bearing interest at the prime rate plus 1/4% per annum and
secured by 10,000 shares of Common Stock. As of March 15,
7
<PAGE>
1995, the amount of indebtedness outstanding was $98,446, which is the largest
amount of indebtedness outstanding under the note since January 1, 1994.
In January 1993, Kevin Bratton, Vice President and Treasurer of the
Company, borrowed $100,000 from the Company in connection with the exercise of a
stock option granted to him on March 14, 1983. Mr. Bratton issued the Company a
note that bears interest at the prime rate plus 1/4% per annum and is secured by
the 18,939 shares of Common Stock issued to Mr. Bratton upon exercise of the
stock option. As of March 15, 1995, the amount of indebtedness outstanding was
approximately $116,807, which is the largest amount of indebtedness outstanding
under the note since January 1, 1994.
The Company has a $12,000,000 revolving credit facility and a $6,000,000
working capital line of credit with Fleet Bank -- NH. Mrs. Hager, a director of
the Company, has been a director of Fleet Bank -- NH since 1986.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the five most highly compensated executive officers
of the Company who received compensation in excess of $100,000 during 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION(1) OPTIONS(2) COMPENSATION(3)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- - -------------------------------- --------- ----------- --------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Edward B. Hager ................ 1994 $ 285,500 $ 55,000 $ 1,475 50,000 $ 9,643
Chief Executive Officer 1993 259,545 35,000 -- 50,000 9,534
1992 235,950 30,000 1,538 50,000 9,795
John P. Gallo .................. 1994 285,500 50,000 38,668 50,000 9,643
President and Chief 1993 259,545 30,000 35,387 50,000 9,534
Operating Officer 1992 235,950 25,000 38,340 50,000 9,795
Donald F. H. Wallach ........... 1994 219,615 50,000 3,575 -- 9,198
Vice President of the 1993 199,650 10,000 4,831 -- 9,110
Company and President 1992 181,500 17,000 12,219 -- 9,533
of Molecular Packaging
Systems, Inc. and
Micro Vesicular
Systems, Inc.(4)
Stephen G. Hoch ................ 1994 177,021 5,000 7,200 8,000 9,528
Vice President 1993 168,732 5,000 24,998 -- 9,365
1992 149,808 -- 7,200 20,000 5,693
Denis M. O'Donnell ............. 1994 169,500 25,000 7,200 8,000 9,487
Vice President 1993 169,808 10,000 7,200 10,000 9,647
1992 156,828 -- 7,701 8,000 2,389
Lawrence N. Zitto .............. 1994 128,999 7,000 7,200 10,000 9,189
Vice President 1993 115,952 7,000 6,500 10,000 9,819
1992 105,451 7,000 6,000 7,000 9,144
</TABLE>
8
<PAGE>
- - ------------------
(1) The amounts shown in this column represent automobile allowances, relocation
expenses, medical expense reimbursements, housing allowances and
compensation for unused vacation time. Mr. Gallo received $32,943 in 1994 as
compensation for unused vacation time.
(2) The Company has never granted any stock appreciation rights.
(3) The amounts shown in this column represent premiums for group life insurance
and medical insurance paid by the Company and the Company's contributions
under its 401(k) plan. The group life insurance premiums paid by the Company
for each of Drs. Hager, Wallach and O'Donnell and Messrs. Gallo, Hoch and
Zitto for the last fiscal year were $1,270, $825, $1,270, $1,270 $1,270 and
$1,270, respectively. The medical insurance premiums paid by the Company to
each of Drs. Hager, Wallach and O'Donnell and Messrs. Gallo, Hoch and Zitto
were $7,101. The Company's matching contributions under its 401(k) savings
plan to each of Drs. Hager, Wallach and O'Donnell and Messrs. Gallo, Hoch
and Zitto for the last fiscal year were $1,272, $1,272, $1,116, $1,272,
$1,157 and $818, respectively.
(4) Dr. Wallach resigned as a Vice President of the Company as of September 1,
1994 and as President of Molecular Packaging Systems, Inc. and Micro
Vesicular Systems, Inc. as of December 31, 1994.
STOCK OPTIONS
The following tables summarize option grants and exercises during 1994 to
or by the Named Executive Officers, and the value of the options held by such
persons at the end of 1994. No SARs were granted or exercised during 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------------------- AT ASSUMED ANNUAL RATES OF
NUMBER OF STOCK PRICE APPRECIATION
SECURITIES % OF TOTAL FOR OPTION TERM (3)
UNDERLYING OPTIONS GRANTED EXERCISE OR --------------------------
OPTIONS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION 5% 10%
NAME (#) IN FISCAL YEAR ($/SHARE) DATE $ $
- - --------------------------- --------------- ----------------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edward B. Hager(1) ........ 50,000 20.5% $ 13.25 12/07/04 $ 417,375 $ 1,053,375
John P. Gallo(1) .......... 50,000 20.5 13.25 12/07/04 417,375 1,053,375
Donald F.H. Wallach ....... -- -- -- -- -- --
Stephen G. Hoch(2) ........ 8,000 3.3 13.25 12/07/04 66,780 168,540
Denis M. O'Donnell(2) 8,000 3.3 13.25 12/07/04 66,780 168,540
Lawence N. Zitto(2) ....... 10,000 4.1 13.25 12/07/04 83,475 210,675
</TABLE>
- - ------------------
(1) Options are exercisable in full six months after the date of grant.
(2) Options are exercisable one year after the date of grant, with 25% of the
shares covered thereby becoming exercisable at that time and with an
additional 25% of the shares becoming exercisable on each successive
anniversary date, with full vesting occurring on the fourth anniversary
date.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the dates the respective options were granted to
their expiration dates.
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<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END
EXERCISE REALIZED (#) ($)
NAME (#) ($) (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- - ---------------------------------- ----------- ----------- ------------------------- ---------------------------
<S> <C> <C> <C> <C>
Edward B. Hager .................. -- -- 295,000/50,000 $ 947,750/$0
John P. Gallo .................... 47,218 $ 530,967 345,000/50,000 2,013,250/0
Donald F.H. Wallach .............. 20,000 5,000 25,000/0 0/0
Stephen G. Hoch .................. -- -- 81,175/33,725
Denis M. O'Donnell ............... -- -- 25,250/25,750 28,813/24,437
Lawrence N. Zitto ................ -- -- 33,875/21,625 168,560/17,375
</TABLE>
- - ------------------
(1) Represents the difference between the exercise price and the last sales
price of the Common Stock on the date of the exercise.
(2) Value based on market value of the Company's Common Stock at the end of
fiscal 1994 ($12.125 per share) minus the exercise price.
EMPLOYMENT AGREEMENTS
Pursuant to employment agreements between the Company and each of Dr. Hager
and Mr. Gallo, the terms of which agreements were extended by the Board of
Directors in December 1994, each of them will be entitled to a 10% increase in
salary for each year through 1999. In addition, each of these officers is
entitled to continuation of his salary until December 31, 1999 if terminated
without cause prior to that date. Dr. Wallach, whose employment agreement
terminated on December 31, 1994, resigned as a Vice President of the Company as
of September 1, 1994 and as President of MPS and MVS as of December 31, 1994.
Each of Drs. Hager and Wallach and Mr. Gallo is bound by certain non-compete and
non-solicitation obligations for five years after termination of employment or
such longer period during which he receives severance payments under the
employment agreement.
REPORT OF THE COMPENSATION COMMITTEE
Overview and Philosophy
The Compensation and Stock Option Committee of the Board of Directors (the
'Committee') is composed of five non-employee directors and is responsible for
the development and administration of the Company's executive compensation
policies and programs, subject to the review and approval by the full Board. The
Committee reviews and recommends to the Board for its approval the salaries and
incentive compensation for the executive officers of the Company and grants
stock options to executives and other key employees of the Company and its
subsidiaries.
The objectives of the Company's executive compensation program are to:
o Support the achievement of strategic goals and objectives of the Company.
o Attract and retain key executives critical to the long-term success of
the Company.
o Align the executive officers' interests with the success of the Company.
Compensation Program
The Company's executive compensation program consists of three principal
elements -- base salary, annual cash incentive compensation and long-term
incentive compensation in the form of stock options.
The base salaries of Dr. Hager and Mr. Gallo have been established pursuant
to the terms of employment agreements between each of them and the Company. See
'Employment Agreements.' Base salary levels for the Company's executive officers
are generally established based on a review of
10
<PAGE>
compensation for competitive positions in the market, the executives' job skills
and experience and judgments as to past and future contributions of the
executives to the Company's success. Because the Company is engaged in the
animal health and pet care products, skin care products and biotechnology
businesses, it is difficult to make meaningful compensation comparisons. The
Committee seeks to set the annual base salaries of its executives at levels
competitive with those paid to executives in these businesses. It seeks,
however, to provide its executives with opportunities for substantially higher
compensation through annual incentive awards and stock options.
The annual cash incentive compensation is designed to tie annual awards to
Company and individual executive performance. Because the Company's business
strategy has been to use the profits from its 'core business' (animal health and
pet care products and skin care products) to fund the development of its
biotechnology business, typical corporate performance objectives based on
increases in net income or earnings per share are not applicable to the Company.
Accordingly, the Committee considers a number of factors in determining whether
annual incentive awards should be paid, including (i) achievement by the Company
and/or specific business units of approved budgets, new product introductions,
progress in development of new products and operating income and cash flow goals
and (ii) achievement by the executives of their assigned objectives. In
considering individual performance, as contrasted to Company performance, the
Committee relies more on subjective evaluations of executive performance than on
quantitative data or objective criteria.
Long-term incentives for executive officers and key managers are provided
through stock options. The objectives of this program are to align executive and
stockholder long-term interests by creating a strong and direct link between
executive compensation and stockholder return, and to enable executives to
develop and maintain a significant, long-term stock ownership position in the
Company's Common Stock.
Stock options are granted at an option price equal to the fair market value
of the Company's Common Stock on the date of grant and will only have value if
the Company's stock price increases. In selecting executives eligible to receive
option grants and determining the amount of such grants, the Committee evaluates
a variety of factors including (i) the job level of the executive, (ii) option
grants awarded by competitors to executives at a comparable job level, and
(iii) past, current and prospective service to the Company rendered, or to be
rendered, by the executive. It has been the Company's practice to fix the
exercise price of option grants at 100% of the fair market value per share on
the date of grant.
Chief Executive Officer's 1994 Compensation
Dr. Edward B. Hager, Chairman of the Board and Chief Executive Officer of
the Company, is eligible to participate in the same executive compensation plans
available to the other Company executives. The Committee has set Dr. Hager's
total annual compensation, including annual incentive awards and potential
additional compensation derived from the Company's stock option program, at a
level it believes is competitive with other comparable companies.
Dr. Hager's annual compensation is governed in large part by the terms of
his employment agreement with the Company. In December 1994, the Company
extended the term of Dr. Hager's agreement through December 31, 1999. This
agreement provides that Dr. Hager will be entitled to a 10% increase in his base
salary each year. For 1994, Dr. Hager's salary was $285,500, an increase of
$25,955 (10%) over his salary for 1993.
In determining Dr. Hager's incentive compensation and stock option award,
the Committee considered not only the value added to the Company by Dr. Hager's
extensive medical expertise but also the diverse nature and competing demands of
the two businesses conducted by the Company. The Committee determined that the
Company's 'core business' had grown significantly in 1994 and its profits
increased over 1993 and that its biotechnology business made significant
progress in 1994 despite the lack of funding normally available to comparable
companies. The favorable progress in both businesses was, in the Committee's
judgment, attributable in large part to the leadership efforts of Dr. Hager and
the Company's President, Mr. Gallo. Accordingly, the Committee awarded Dr. Hager
a
11
<PAGE>
1994 cash bonus of $55,000 (19.3% of his annual salary), and granted him stock
options in 1994 for the purchase of 50,000 shares of Common Stock of the
Company.
Tax Considerations
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over one million
dollars paid to its chief executive officer and its four other most highly
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. If the
stockholders of the Company approve the proposed amendments to the Company's
1991 Stock Option Plan, which limit the number of shares subject to stock
options that may be granted to Company employees, the Plan will comply with
Section 162(m). Accordingly, the compensatory value of options granted to the
Company's highly-paid executives that have an exercise price equal to the fair
market value of the Common Stock on the date of grant will be deductible for
federal income tax purposes and will not be subject to the limitations imposed
by Section 162(m). Based on the compensation received by Dr. Hager and the other
Named Executive Officers, it does not appear that the Section 162(m) limitation
will have a significant impact on the Company in the near term. While the
Committee does not currently intend to qualify its annual cash incentive
compensation as a performance-based plan, it will continue to monitor the impact
of Section 162(m) on the Company.
Compensation and Stock Option
Committee
John O. Marsh, Jr., Chairman
Constantine L. Hampers, M.D.
Henry A. Malkasian
David G. Pinosky, M.D.
Terrence O'Donnell
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Drs. Pinosky and Hampers and Messrs. Marsh, Malkasian and O'Donnell served
on the Company's Compensation and Stock Option Committee during 1994. Mr.
Malkasian has been Secretary of the Company since January 1980. Messrs.
Malkasian and Marsh are affiliated with Malkasian & Budge and Hazel & Thomas,
P.C., respectively, law firms that have provided certain legal services to the
Company.
12
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company for the last five fiscal years with the cumulative
total return on the AMEX Composite Index and a peer group over the same period
(assuming the investment of $100 in the Company's Common Stock, the AMEX
Composite Index and the peer group on December 31, 1989, and reinvestment of all
dividends). The peer group consists of the Company, The Liposome Company, Inc.,
Liposome Technology, Inc., Nexstar Pharmaceuticals (formerly Vestar, Inc.) and
Advanced Polymer Systems, Inc.
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
<S> <C> <C> <C> <C> <C> <C>
IGI, Inc. $ 100 $ 95 $ 195 $ 137 $ 118 $ 162
AMEX Composite Index $ 100 $ 82 $ 105 $ 106 $ 126 $ 115
Peer Group $ 100 $ 94 $ 421 $ 311 $ 195 $ 192
</TABLE>
PROPOSAL 2 -- PROPOSED AMENDMENTS TO THE 1991 STOCK OPTION PLAN
On March 22, 1995, the Company's Board of Directors adopted, subject to
stockholder approval, amendments to the Company's 1991 Stock Option Plan (the
'1991 Plan') (i) increasing the number of shares of Common Stock authorized for
issuance under the 1991 Plan from 1,200,000 to 1,900,000, (ii) limiting to
100,000 the number of shares for which options may be granted in any calendar
year to any one person and (iii) providing that options may be granted to
consultants and advisors to the Company. The Board of Directors believes that
stock options have been, and will continue to be, an important element in
attracting and maintaining key employees and directors. The Company does not
believe that the current number of shares authorized under the 1991 Plan is
adequate for the Company's needs. As of March 15, 1995, 139,500 shares of Common
Stock remained available for future grants of stock options under the 1991 Plan.
13
<PAGE>
ADMINISTRATION AND ELIGIBILITY
The 1991 Plan and the grant of options thereunder is administered by the
Compensation and Stock Option Committee of the Company's Board of Directors. The
Compensation and Stock Option Committee has the power to determine which key
employees of the Company will be granted options under the 1991 Plan, whether
such options will be incentive stock options (ISOs) or non-qualified stock
options (NQOs), the number of shares of Common Stock covered by, and the
duration of, each option so granted under the 1991 Plan, and other terms and
conditions applicable to each option so granted under the 1991 Plan. One
proposed amendment to the 1991 Plan would expand the category of individuals
eligible to participate in the 1991 Plan. Currently, only officers and key
employees of the Company and its subsidiaries and non-employee directors of the
Company are eligible to participate. The proposed amendment would also allow
NQOs to be granted to consultants and advisors to the Company and its
subsidiaries. The number of individuals receiving stock options varies from year
to year depending on various factors, such as the number of promotions and the
Company's hiring needs during the year, and thus the Company cannot now
determine award recipients. At March 15, 1995, the Company and its subsidiaries
had approximately 197 full-time employees. The last sale price of the Common
Stock reported by the American Stock Exchange on April 10, 1995 was $14.875 per
share.
PURCHASE PRICE AND OPTION TERMS
The price at which shares of Common Stock may be purchased upon the
exercise of options granted under the 1991 Plan is determined by the
Compensation and Stock Option Committee at the time the option is granted. In
the case of ISOs granted to employees and options which the Company intends to
qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the 'Code'), the exercise price per share may
not be less than the fair market value of a share of Common Stock on the date
the option is granted. In the case of an ISO granted to an employee who owns
more than 10% of the Common Stock at the time of grant, the exercise price per
share may not be less than 110% of such fair market value. The exercise price
per share for NQOs granted to key employees may not be less than 50% of the fair
market value of a share of Common Stock on the date of grant. If the
stockholders approve the amendments to the 1991 Plan, the maximum number of
shares for which options may be granted in any one calendar year to any one
person will be 100,000. In the case of NQOs granted to Eligible Directors, the
exercise price per share shall be the fair market value of a share on the date
of grant. No ISO granted under the 1991 Plan may be exercised more than ten
years after the date of grant, and no ISO granted to a person who owns more than
10% of the Common Stock at the time of grant may be exercised more than five
years following the date of grant. The 1991 Plan expires in 2001.
While the Company may grant options which become exercisable at different
times or within different periods, the Company has generally granted options
which are exercisable on a cumulative basis in annual installments of 25% each
during the first, second, third and fourth years after the date of grant. In
1994 the Company granted options to Dr. Hager and Mr. Gallo, the Chief Executive
Officer and President of the Company, respectively, which are exercisable in
full six months after the date of grant.
Any stock option granted under the 1991 Plan is transferable only by will
or the laws of descent and distribution or, in the case of NQOs, pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act or the rules thereunder. All options
granted under the 1991 Plan to key employees will terminate no later than three
months after the severance of the employment relationship between the Company
and the optionee for any reason, for cause or without cause, other than death.
In the event that an employee dies before the date of expiration of an option,
such option will terminate one year following the date of death (subject to the
condition that no option is exercisable after the expiration of ten years from
its date of grant).
Optionees who exercise options to purchase securities under the 1991 Plan
may pay cash in the amount of the option exercise price and/or deliver other
shares of Common Stock owned by the optionee with a fair market value equal to
the exercise price of the option shares to be purchased.
14
<PAGE>
In the event of a dissolution, liquidation, merger, consolidation or
reorganization of the Company (an 'Event'), the Board may decide to terminate
each outstanding option. If the Board so decides, such option shall terminate as
of the effective date of the Event, but the Board shall provide optionees a
reasonable notice period during which options which are then exercisable may be
exercised.
DIRECTOR OPTIONS
Sixty days after initial election as a non-employee director ('Eligible
Director') by either the Board of Directors or the Company's stockholders, each
Eligible Director is granted NQOs for 20,000 shares of Common Stock. In
addition, each Eligible Director who was a director on the last business day of
each of 1992, 1993 and 1994 was granted a non-qualified option to purchase
10,000 shares of Common Stock, and each Eligible Director then serving as a
director on the last business day of each of 1995 and 1996 will be granted a
non-qualified option to purchase 10,000 shares of Common Stock. The exercise
price per share is the fair market value on the date of grant. Options granted
to Eligible Directors are exercisable in full beginning six months after the
date of grant and terminate ten years after the date of grant. Such options
cease to be exercisable at the earlier of their expiration or three years after
an Eligible Director ceases to be a director for any reason. In the event that
an Eligible Director ceases to be a director on account of his death, his
outstanding options (whether exercisable or not on the date of death) may be
exercised within three years after such date (subject to the condition that no
such option may be exercised after the expiration of ten years from its date of
grant).
CONSULTANT AND ADVISOR OPTIONS
In 1991, the Board of Directors adopted the IGI, Inc. Non-Qualified Stock
Option Plan (the 'NQ Plan'), which authorizes the Board to grant NQOs to
consultants and advisors to the Company and its subsidiaries. A total of 250,000
shares were reserved for issuance under the NQ Plan. As of March 15, 1995,
options for the purchase of an aggregate of 220,000 shares had been granted.
The proposed amendments to the 1991 Plan, if adopted by the stockholders,
would increase the number of shares available under the 1991 Plan and allow the
Company to grant NQOs to consultants and advisors as well as officers, key
employees and non-employee directors. If the amendments receive stockholder
approval, no further options would be granted under the NQ Plan and the NQ Plan
would be terminated. The Board of Directors believes that the ability to grant
stock options to consultants and advisors enables the Company to attract outside
expertise and advice by providing the recipients of the options with an
incentive to own equity in the Company.
FEDERAL INCOME TAX ASPECTS OF OPTIONS
The following is a summary of the federal income tax treatment of ISOs and
NQOs.
Non-Qualified Options. No taxable income is recognized by the optionee
upon the grant of an NQO. The optionee must recognize as ordinary income in the
year in which the option is exercised the amount by which the fair market value
of the purchased shares on the date of exercise exceeds the option price.
However, special rules may apply to persons required to file reports under
Section 16(b) of the Exchange Act as a consequence of the interaction of Section
83 of the Code and Rule 16b-3. The Company will be entitled to a business
expense deduction equal to the amount of ordinary income recognized by the
optionee, subject to the limitations of Section 162(m) of the Code. Any
additional gain or any loss recognized upon the subsequent disposition of the
purchased shares will be a capital gain or loss, and will be a long-term gain or
loss if the shares are held for more than one year.
Incentive Stock Options. As in the case of NQOs, no taxable income will be
recognized by the optionee upon the grant of an ISO. However, unlike NQOs, no
taxable income will be recognized by the optionee upon the exercise of an ISO,
and no corresponding expense deduction will be available to the Company.
Generally, if an optionee holds shares acquired upon the exercise of ISOs until
the later of (i) two years from the grant of the option or (ii) one year from
the date of transfer of the purchased shares to him or her (the 'Statutory
Holding Period'), any gain recognized by the optionee on a subsequent sale of
such shares will be treated as long-term capital gain. The gain recognized upon
the sale of the stock is the difference between the option price and the sale
price of the stock. The net
15
<PAGE>
federal income tax effect on the holder of ISOs is to defer, until the stock is
sold, taxation of any increase in the stock's value from the time of grant to
the time of exercise.
If the optionee sells the shares prior to the expiration of the Statutory
Holding Period, he or she will realize taxable income at ordinary income tax
rates in an amount equal to the lesser of (i) the value of the shares on the
date of exercise less the option price, or (ii) the amount realized on the date
of sale less the option price, and the Company will receive a corresponding
business expense deduction. However, special rules may apply to an
officer-optionee. The amount by which the proceeds of sale exceed the fair
market value of shares on the date of exercise will be treated as long-term
capital gain if the shares are held for more than one year prior to the sale and
as short-term capital gain if the shares are held for a shorter period. If the
optionee sells the stock for less than the option price, he or she will
recognize a capital loss equal to the difference between the sale price and the
option price. The loss will be a long-term capital loss if the shares are held
for more than one year prior to the sale and a short-term capital loss if the
shares are held for a shorter period.
For purposes of the 'alternative minimum tax' applicable to individuals,
the exercise of an ISO is treated in the same manner as the exercise of an NQO.
Thus, in the year of option exercise an optionee must generally include in his
or her alternative minimum taxable income the difference between the exercise
price and the fair market value of the stock on the date of exercise. The
alternative minimum tax is imposed upon an individual's alternative minimum
taxable income at rates of 26% to 28%, but only to the extent that such tax
exceeds the taxpayer's regular income tax liability for the taxable year.
If an optionee transfers 'statutory option stock' (which includes stock
acquired through the exercise of an ISO) to exercise stock options prior to the
expiration of the applicable holding periods, the optionee will recognize
ordinary income and the Company will receive a corresponding business expense
deduction in an amount equal to the lesser of (i) the fair market value of the
statutory option stock on the date it was acquired less its exercise price, or
(ii) the fair market value of such statutory option stock on the date of the
exchange less its adjusted basis. Such deduction will be subject to the
limitations imposed by Section 162(m) of the Code.
BOARD RECOMMENDATION
For the reasons set forth above, the Board of Directors believes that the
amendments to the 1991 Plan increasing the number of shares of Common Stock
authorized for issuance from 1,200,000 to 1,900,000 shares, limiting to 100,000
the number of shares for which options may be granted in any calendar year to
any one person and providing that options may be granted to consultants and
advisors to the Company is in the best interests of the Company and its
stockholders and recommends that the stockholders vote FOR the amendment.
PROPOSAL 3 -- RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P. as auditors of
the Company for the fiscal year ending December 31, 1995, subject to
ratification by stockholders at the Meeting. If this proposal is not approved at
the Meeting, the Board of Directors will reconsider this selection. A
representative of Coopers & Lybrand L.L.P., which served as auditors for the
fiscal year ended December 31, 1994, is expected to be present at the Meeting to
respond to appropriate questions, and to make a statement if he or she so
desires.
PROPOSAL 4 -- STOCKHOLDER PROPOSAL ON ANNUAL MEETING LOCATION
Mr. Robert Linton, 85 Howard Street, Vineland, New Jersey 08360, the
beneficial owner of 14,400 shares of Common Stock, has advised the Company that
he intends to present for consideration and action at the Meeting the following
resolution:
16
<PAGE>
Resolution Proposed By Stockholder
RESOLVED: That the Board of Directors of the Company consider a proposal
to hold the annual meetings in the vicinity of the Company's world headquarters
located in Buena, New Jersey.
Supporting Statement of Proponent
The current policy of locating the annual meetings solely in the Upper New
England area prevents the large body of shareholders located in the vicinity of
the world headquarters from taking an active part in the proceedings of their
Company. Inasmuch as the Board of Directors meetings are now held at the Buena
location and there are any number of suitable locations within a forty-five mile
radius of the world headquarters able to host an annual meeting, the relocation
of the meetings would pose no significant burden to the Company while providing
the shareholders with an opportunity to communicate directly with their
Company's directors.
Statement in Opposition to Proposal
The Company's By-Laws provide that annual meetings and special meetings of
the Company's stockholders shall be held at such place, within or without the
State of Delaware, as the directors may, from time to time, determine. The Board
of Directors of the Company has chosen Boston, Massachusetts, the location of
the 1994 Annual Meeting of Stockholders, as the location for the 1995 Annual
Meeting of Stockholders. The 1992 and 1993 Annual Meetings were held in Nashua,
New Hampshire, the corporate headquarters of two of the Company's subsidiaries,
MPS and MVS. The determination as to the location of the Company's annual
meetings is one in which management should have flexibility and discretion. The
Company has chosen venues such as Boston and Nashua because of the ease of
access to these locations by the financial analysts and institutional investors
who traditionally attend corporate annual meetings.
The stockholder proposal presupposes that stockholder business and
communications are limited to the annual meeting. On the contrary, however, the
Company distributes annual reports to its stockholders and many stockholders
correspond with the Company during the year. These avenues of communication
provide information in a way that is convenient and virtually cost-free to
stockholders. In addition, stockholders residing in the vicinity of the
Company's headquarters have potentially greater access to the Company's
officers, employees and facilities than more distant stockholders. The Company
always welcomes visits to its headquarters by stockholders and will continue to
do so as long as such visits do not interfere with the operations of the
Company's business.
If the stockholder-proposed resolution is approved, the Company believes it
would be unable to determine whether it was in compliance with the resolution
because the 'vicinity' of Buena, New Jersey is vague. In addition, the Company
believes that holding annual meetings in the vicinity of Buena would not
significantly increase stockholders' access to management and would decrease the
Company's flexibility without a compensating benefit to the Company's
stockholders.
BOARD RECOMMENDATION
The Board of Directors recommends that the stockholders vote AGAINST the
stockholder proposal.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 1996 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at its
offices, Wheat Road and Lincoln Avenue, Buena, New Jersey 08310, no later than
December 16, 1995 in order to be considered for inclusion in the Proxy Statement
relating to that meeting.
17
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed Proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, telegraph,
facsimile and personal interviews. The Company will also request brokerage
houses, custodians, nominees and fiduciaries to forward copies of the proxy
material to those persons for whom they hold shares and request instructions for
voting the Proxies. The Company will reimburse such brokerage houses and other
persons for their reasonable expenses in connection with this distribution. The
Company has retained Corporate Investor Communications to assist in the
solicitation of proxies for the Meeting, at an estimated cost to the Company of
$6,000, plus reimbursement of certain expenses.
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
By Order of the Board of Directors,
HENRY A. MALKASIAN,
Secretary
April 14, 1995
18
<PAGE>
APPENDIX A
IGI, INC.
1991 STOCK OPTION PLAN
1. Purpose of Plan
The purpose of this plan (the "Plan") is to encourage key
employees, including officers, of IGI, Inc., a Delaware corporation,
("IGI") and any present or future subsidiary and parent of IGI
(hereinafter collectively referred to as the "Company") to acquire
shares of common stock of IGI, $.01 par value per share, (the "Common
Stock") and thereby increase their proprietary interest in the
Company's success and provide an added incentive to remain in the
employ of the Company. It is also the purpose of the Plan to grant
options to purchase Common Stock to Eligible Directors of IGI (as
defined in Section 4 of the Plan) in order to enhance the Company's
ability to attract and retain the services of such persons, to provide
additional incentive to them and to encourage the highest level of
performance by them by offering them a proprietary interest in the
Company's success. The words parent and subsidiary shall be interpreted
in accordance with Section 422A and Section 425 of the Internal Revenue
Code of 1986, as from time to time amended (the "Code"). It is intended
that options granted under the Plan shall constitute either "incentive
stock options" within the meaning of Section 422A of the Code, or
"non-qualified options," as determined by the Committee named in
Section 3 of the Plan in its sole discretion and indicated on each form
of option grant (the "Option Grant"), and the terms of the Plan and
Option Grants shall be construed accordingly, provided, however, that
Eligible Directors shall be granted only non-qualified options.
2. Shares Reserved under the Plan
Subject to the adjustment provided in Section 9, the aggregate
number of shares of Common Stock of IGI which may be issued and sold
pursuant to options granted under the Plan shall not exceed 500,000
shares of Common Stock, which may be either authorized but unissued
shares or treasury shares. If any options granted under the Plan shall
terminate or expire without being fully exercised, the shares which
have not been purchased will again become available for purposes of the
Plan.
3. Administration
The Plan shall be administered solely by a committee (the
"Committee") consisting of not less than three (3) members of the Board
of Directors of IGI (the "Board"). None of the members of the Committee
shall be, or shall have been at any time within one year prior to the
date of his appointment to the Committee, a person who in the opinion
of counsel to the Company is not a
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<PAGE>
"disinterested person" as such term is used in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Act"). The
Committee shall be appointed by, and shall serve at the pleasure of,
the Board of Directors. A majority of the members present at any
meeting at which a quorum is present, and any acts approved in writing
by all of the members of the Committee without a meeting, shall
constitute the acts of the Committee. The Committee shall have the
powers granted to it in Sections 3, 4, 5, 7, and 8 of this Plan. The
Committee is authorized to interpret the Plan and, subject to the
provisions of the Plan, to prescribe, amend, and rescind rules and
regulations relating thereto. The Committee is further authorized,
subject to the express provisions of the Plan, to alter or amend the
form of Option Grant attached hereto and to make all other
determinations necessary or advisable in the administration of the
Plan. The interpretation and administration by the Committee of any
provisions of the Plan and the Option Grant shall be final and
conclusive on all persons having any interest therein.
No member of the Committee or the Board shall be held liable for
any action or determination made in good faith with respect to the Plan
or any option granted thereunder.
4. Option Grants
Options to purchase shares of Common Stock under the Plan may be
granted to key employees (including officers and directors who are
employees) of the Company. In selecting the employees to whom options
will be granted and in deciding how many shares of Common Stock will be
subject to each option, the Committee shall give consideration to the
importance of an employee's duties, to his experience with the Company,
to his future value to the Company, to his present and potential
contribution to the success of the Company, and to such other factors
as the Committee may deem relevant. Subject to the express provisions
of the Plan and the form of Option Grant incorporated herein by
reference as from time to time altered or amended, the Committee shall
have authority to determine with respect to each Option Grant executed
and delivered to a key employee the number of installments, the number
of shares of Common Stock in each installment, and the exercise dates,
and, to the extent not inconsistent with the applicable provisions of
the Code, if any, may specify additional restrictions and conditions
for any Option Grant executed and delivered to a key employee. Each
incentive stock option shall expire not later than ten years from the
date of the grant of such option.
Except as provided in Section 7 below, no incentive stock option
may be granted to any employee who, at the time such option is granted,
owns stock possessing more than 10 percent of the
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<PAGE>
total combined voting power of all classes of stock of the Company
within the meaning of Section 422A of the Code.
The date of grant of an option to a key employee under the Plan
shall be the date the Committee votes to grant the option, but no
optionee who is a key employee shall have the right to exercise his
option until the Company has executed and delivered the Option Grant to
such optionee. Each option granted under the Plan to a key employee
shall be evidenced by and subject to the terms and conditions of the
Option Grant which is incorporated into the Plan by reference as from
time to time altered or amended.
No stock option may be transferred by the optionee, other than by
will or the laws of descent and distribution or a distribution pursuant
to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the rules
thereunder. A stock option can be exercised during the optionee's life
only by him, or by any person to whom such option may have been
transferred as described in this paragraph.
"Eligible Directors" shall mean directors who are directors on the
date of grant (and, if applicable, on the date of amendment of a
grant), who are not employees of the Company and who are not eligible
to participate under any other Company stock related plan unless in the
opinion of counsel to the Company such participation would not impair
the status of such Eligible Director as a "disinterested person" within
the meaning of Rule 16b-3 promulgated under the Act.
Sixty days after his or her initial election as a director by
either the Board of Directors or the Company's shareholders, each
Eligible Director shall be granted a non-qualified option to purchase
20,000 shares of Common Stock, and each Eligible Director who is a
director on the last business day of calendar 1992 shall on such day be
granted a non-qualified option to purchase 10,000 shares of Common
Stock, and each Eligible Director who is a director on the last
business day of calendar 1993 shall on such day be granted a
non-qualified option to purchase 10,000 shares of Common Stock.
The date of grant of an option to an Eligible Director under the
Plan shall be the applicable day referred to immediately above.
5. Option Plan
The price per share at which each option granted under the Plan to
a key employee may be exercised shall be determined by the
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<PAGE>
Committee subject to the provisions of this Section 5. In the case of
an incentive stock option, the exercise price shall not be less than
the fair market value per share on the date of grant, as determined by
the Committee in accordance with applicable provisions of the Code then
in effect with respect to incentive stock options. In the case of a
non-qualified option, the exercise price shall not be less that 50% of
the fair market value per share on the date of grant, as so determined.
The purchase price per share of Common Stock under each non-qualified
option granted to an Eligible Director shall be the fair market value
of such Common Stock as determined by the closing sales price of such
Common Stock on the principal exchange on which such Common Stock is
traded on the date of grant, or if there are no sales on such date, on
the trading day next preceding the date of grant on which a sale took
place, or, if the Common Stock is not so traded, then as determined by
a principal market maker for such Common Stock selected by the
Committee. In no event shall the option price per share for any option
under the Plan be less than the par value per share.
6. Limitation on Amount
The aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which incentive stock options
are exercisable for the first time by an individual during any calendar
year under all plans of the Company shall not exceed $100,000.
7. Special Rule for 10 Percent Shareholders
The Committee may grant incentive stock options under this Plan to
persons who own more than 10 percent of the combined voting stock of
the Company if (i) at the time of the Option Grant the price per share
at which the option may be exercised is at least 110 percent of the
fair market value of the stock subject to the option and (ii) such
option is not exercisable after the expiration of five years from the
date such option is granted.
8. Non-Qualified Options
Notwithstanding the provisions of Sections 4, 5, 6 and 7 of this
Plan, the Committee may grant options which in one or more respects do
not meet the requirements for incentive stock options established by
Section 422A of the Code. The Committee shall indicate on each Option
Grant whether an incentive stock option within the meaning of Section
422A of the Code or a non-qualified option is thereby granted,
provided, however, that Eligible Directors shall be granted only
non-qualified options.
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<PAGE>
Except as otherwise provided in this Plan, the Committee, in its
sole discretion, shall establish the terms and conditions for each
non-qualified option which it grants. Such terms and conditions may,
but need not, include some or all of the provisions of Section 4, 5, 6
and 7 of this Plan with respect to incentive stock options. If the
Committee grants an option which in all respects meets the requirements
for incentive stock options it may nonetheless designate such option a
non-qualified option on the Option Grant, in which case it shall be
deemed not to be an incentive stock option.
Each option granted under the Plan to an Eligible Director shall
be evidenced by and subject to the terms and conditions of an Option
Grant. Notwithstanding the provisions of the second paragraph of this
Section 8, each Option Grant executed and delivered to an Eligible
Director shall contain the following terms and conditions. Each
non-qualified option granted to an Eligible Director shall expire ten
years from the date of grant of such option, and shall be exercisable
in full beginning on the date which is six months after the date of
grant thereof and not before. Each Eligible Director to whom an option
is granted may exercise such option from time to time, in whole or in
part, during the period that it is exercisable, by payment of the
option price of each share purchased, in cash or by delivery of other
shares of the Company's Common Stock owned by the Eligible Director
with a fair market value equal to the exercise price of the optioned
shares purchased, or in any combination of the two forms of payment.
Options granted to an Eligible Director shall cease to be exercisable
at the earlier of their expiration or three years after the date such
Director ceases to be a director for any reason. If an Eligible
Director ceases to be a director on account of his death, any
non-qualified option previously granted to him, whether or not
exercisable at the date of death, may be exercised by his executor,
administrator or the person or persons to whom his rights under the
option shall pass by will or the applicable laws of descent and
distribution, at any time within three years after the date of death,
but in no event after the expiration of the option. In the event of an
exercise of an option granted to an Eligible Director, the shares of
Common Stock subject thereto will be acquired for investment and not
with a view to distribution thereof unless there shall be an effective
registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), with respect thereto. In the event that the Company,
upon the advice of counsel, deems it necessary to list upon official
notice of issuance shares to be issued pursuant to the Plan on a
national securities exchange or to register under the 1933 Act or other
applicable federal or state statute any shares to be issued pursuant to
the Plan, or to qualify any such shares for exemption from the
registration requirements of the 1933 Act under the Rules and
Regulations of the Securities and
A-5
<PAGE>
Exchange Commission or for similar exemption under state law, then the
Company shall notify each Eligible Director to that effect and no
shares of Common Stock subject to an option shall be issued until such
registration, listing or exemption has been obtained. The Company shall
make prompt application for any such registration, listing or exemption
pursuant to federal or state law or rules of such securities exchange
which it deems necessary and shall make reasonable efforts to cause
such registration, listing or exemption to become and remain effective.
Nothing in this Plan or in the Option Grant will confer upon any
Eligible Director the right to continue as a director of IGI. The
shares of Common Stock issued on exercise of the option shall be
subject to any restrictions on transfer then in effect pursuant to the
Certificate of Incorporation or By-laws of the Company.
9. Adjustment of Shares Reserved Under the Plan
The aggregate number and kind of shares reserved under the Plan,
the maximum number of shares as to which options may be granted to any
individual and the option price per share shall be appropriately
adjusted by the Board in the event of any recapitalization of the
Company, but no adjustment in the option price shall be made which
would reduce the option price per share to less than the par value per
share.
10. Dissolution or Reorganization
Prior to a dissolution, liquidation, merger, consolidation, or
reorganization of the Company (the "Event"), the Board may decide to
terminate each outstanding option. If the Board so decides, such option
shall terminate as of the effective date of the Event, but the Board
shall suspend the exercise of all outstanding options a reasonable time
prior to the Event, giving each optionee not less than fourteen days'
written notice of the date of suspension, prior to which an optionee
may purchase in whole or in part the shares available to him as of the
date of receipt of the notice. If the Event is not consummated, the
suspension shall be removed and all options shall continue in full
force and effect.
11. Amendment and Termination of Plan
The Board may amend, suspend, or terminate the Plan, including the
form of Option Grant incorporated herein by reference. No such action,
however, may, without approval or ratification by the shareholders,
increase the maximum number of shares reserved under the Plan except as
provided in Section 9, alter the class or classes of employees eligible
for options, change the number of shares of Common Stock subject to
options to be granted to Eligible Directors or the exercise price
thereof
A-6
<PAGE>
(other than pursuant to Section 9 of this Plan), or the date of grant
or the terms and conditions expressly set forth in Section 8 of this
Plan, with respect to options granted to Eligible Directors, or make
any other change which, pursuant to the Code or regulations thereunder
or Section 16(b) of the Act and regulations promulgated thereunder,
requires action by the shareholders. No such action may, without the
consent of the holder of the option, alter or impair any option
previously granted. The provisions of the Plan which relate to the
grant of options to Eligible Directors shall not be amended more than
once every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act, or the rules thereunder.
In any event, the Plan shall terminate 10 years from the date of
adoption by the Board of Directors, or if earlier, from the date of
approval by the shareholders. Any shares remaining under the Plan at
the time of termination which are not subject to outstanding options
and any shares which thereafter become available because of the
expiration or termination of an option shall cease to be reserved for
purposes of the Plan.
12. Right to Terminate Employment
Nothing contained herein or in any Option Grant executed pursuant
hereto shall restrict the right of the Company to terminate the
employment of any optionee at any time.
13. Date of Adoption
The date of adoption of this Plan by the Board and the Plan's
effective date is March 13, 1991.
14. Date of Approval
The date of approval of this Plan by the shareholders is May 9,
1991.
IGI, INC.
KEY EMPLOYEE OPTION GRANT
This incentive stock option/non-qualified option, granted as
of , 19 (the "Option") is granted by IGI, Inc. ("IGI")
to (the "Optionee"), an employee of IGI or a parent or
subsidiary of IGI (hereinafter collectively referred to as the
"Company").
A-7
<PAGE>
1. Shares Subject to Option
Pursuant to the provisions of the IGI, Inc. 1991 Stock Option
Plan, as amended from time to time (the "Plan"), IGI hereby grants to
the Optionee an option to purchase shares of its Common
Stock ($.01 par value) (the "Optioned Shares") at a price of $ per
share, in accordance with and subject to all the terms and conditions
of the Plan and subject to the terms and conditions hereinafter set
forth. The Plan and any amendments are hereby incorporated by
reference and made a part hereof.
2. Term and Exercise of Option
Except as otherwise provided in the Plan, or in this Option, the
Option shall terminate at the close of business years from the
date of grant and may be exercised only by the Optionee or, to the
extent provided in Section 3(b) hereof, by his legal representative.
While the Option is effective and the Optionee continues to be
employed by the Company, the Optioned Shares shall become available for
purchase by the Optionee in installments on the following dates:
Date Number of Shares
---- ----------------
Unpurchased portions of available installments may be accumulated
and subsequently purchased by the Optionee. The option price of each
share purchased shall be paid in cash or by delivery of other shares of
the Company's Common Stock owned by the Optionee with a fair market
value equal to the exercise price of the Optioned Shares to be
purchased, or in any combination of the two forms of payment.
If the Option is not an incentive stock option within the meaning
of Section 422A of the Internal Revenue Code of 1986, as from time to
time amended, then in addition to payment of the option price for each
share purchased, the Optionee shall pay the amount of federal and state
withholding taxes determined by the Committee named in Section 3 of the
Plan (or by the Committee's designate) to be owing with respect to the
compensation income that the Optionee will realize upon each share
purchased.
The Company, upon fulfillment of the requirements for
exercise, including receipt of the payment of the purchase price
A-8
<PAGE>
and all applicable withholding taxes, shall deliver the shares
purchased hereunder to the Optionee.
3. Terms and Conditions of Exercise
Each exercise and purchase of shares pursuant to the Option shall
be subject to the following terms and conditions:
(a) The Optionee shall have remained in the continuous employ
of the Company from the date of the Option Grant until the date of
exercise, provided that, if the Optionee's employment terminates
for any cause other than death, the Optionee may purchase in whole
or in part within three months after termination of employment the
shares available to him on his termination date provided that the
expiration date of the Option as to such shares shall not have
occurred.
(b) If the Optionee dies, then his legal representative or
the person or persons to whom his rights under the Option shall
pass by will or by the applicable laws of descent and distribution
shall be entitled, subject to the condition that no Option shall
be exercisable after the expiration of ten years from the date it
was granted, within twelve months after the date of his death, to
exercise the Option to the extent that the Optionee would have
been entitled to exercise the Option on the date of his death.
(c) The Optionee shall hold the Optioned Shares for
investment and not with a view to, or for resale in connection
with, any public distribution of such shares, and if requested,
shall deliver to the Company appropriate certificates to that
effect. This restriction shall terminate upon the registration of
such shares under federal and state securities laws.
(d) In the event that the Company, upon the advice of
counsel, deems it necessary to list upon official notice of
issuance any shares to be issued pursuant to the Plan on a
national securities exchange or to register under the Securities
Act of 1933 or other applicable federal or state statute any
shares to be issued pursuant to the Plan, or to qualify any such
shares for exemption from the registration requirements of the
Securities Act of 1933 under the Rules and Regulations of the
Securities and Exchange Commission or for similar exemption under
state law, then the Company shall notify the Optionee to that
effect and no Optioned Shares shall be issued until such
registration, listing or exemption has been obtained. The Company
shall make prompt application for any such registration, listing
or exemption pursuant to federal or state law or rules of such
securities exchange
A-9
<PAGE>
which it deems necessary and shall make reasonable efforts to
cause such registration, listing or exemption to become and remain
effective.
4. Option Non-Transferable
The Option may not be transferred by the Optionee or by
operation of law other than by will or by the laws of descent and
distribution, or by a distribution pursuant to a qualified
domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act or the rules thereunder.
It may be exercised during the lifetime of the Optionee only by
him or by any person to whom the Option may have been transferred
as described in this paragraph.
5. Right to Terminate
Nothing contained in the Option Grant shall restrict the
right of the Company to terminate the employment of the Optionee
at any time.
6. Dissolution or Reorganization
Prior to dissolution, liquidation, merger, consolidation, or
reorganization of the Company (the "Event"), the Board may decide
to terminate each outstanding option. If the Board so decides,
each option shall terminate as of the effective date of the Event,
but the Board shall suspend the exercise of all outstanding
options a reasonable time prior to the Event, giving each Optionee
not less than fourteen days' written notice of the date of
suspension, prior to which an Optionee may purchase in whole or in
part the Optioned Shares available to him as of the date of
receipt of the notice. If the Event is not consummated, the
suspension shall be removed and all options shall continue in full
force and effect.
7. Restrictions on Transfer of Stock
The shares of stock issued on exercise of the Option shall be
subject to any restrictions on transfer then in effect pursuant to
the Certificate of Incorporation or By-laws of the Company and to
any other restrictions or provisions attached hereto and made a
part hereof or set forth in any contract or agreement binding on
the Optionee.
8. Notice Concerning Disposition of Shares
If the Option granted hereby is an incentive stock
option, any disposition by the Optionee of Optioned Shares
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<PAGE>
purchased under the Option within two years from the date of grant
or within one year after their transfer to the Optionee will
deprive the Optionee of certain tax benefits with respect to the
Option which might otherwise be available. Optionees are urged to
review the Prospectus for the offering under which the Option is
granted for a more detailed discussion of the federal tax
consequences of such a disposition under current law.
IGI, INC.
(Corporate Seal)
By:___________________________
JOHN P. GALLO, President
Attest:_______________________
Secretary
A-11
<PAGE>
IGI, INC.
AMENDMENT NO. 1
IGI, INC. 1991 STOCK OPTION PLAN
The IGI, Inc. 1991 Stock Option Plan (the "Plan") is hereby
amended as set forth below:
1. Increase in Authorized Shares
Section 2 of the Plan is hereby amended by deleting the first
sentence thereof and substituting the following therefor:
"Subject to the adjustment provided in Section 9, the
aggregate number of shares of Common Stock of IGI which may be
issued and sold pursuant to options granted under the Plan shall
not exceed 1,200,000 shares of Common Stock, which may be either
authorized but unissued shares or treasury shares."
2. Eligible Director Shares
The penultimate paragraph of Section 4 of the Plan is hereby
amended by adding the following sentence to the end thereof:
"In addition to the foregoing, each Eligible Director who is
a director on the last business day of calendar 1994 shall on such
day be granted a non-qualified option to purchase 10,000 shares of
Common Stock, each Eligible Director who is a director on the last
business day of calendar 1995 shall on such day be granted a
non-qualified option to purchase 10,000 shares of Common Stock,
and each Eligible Director who is a director on the last business
day of calendar 1996 shall on such day be granted a non-qualified
option to purchase 10,000 shares of Common Stock."
3. Transferability of Shares
The first sentence of the paragraph in Section 4 of the Plan
immediately preceding the paragraph defining "Eligible Directors" is
hereby deleted and the following shall be substituted in lieu thereof:
"No stock option may be transferred by the optionee, other
than by will or the laws of descent and distribution or, in the
case of non-qualified options, a distribution pursuant to a
qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the rules
thereunder."
A-12
<PAGE>
4. In all other respects, the Plan shall remain in full force
and effect.
Adopted by the Board of
Directors on March 11, 1993
Adopted by the Stockholders on
May 12, 1993
A-13
<PAGE>
IGI, INC.
AMENDMENT NO. 2
IGI, INC. 1991 STOCK OPTION PLAN
The IGI, Inc. 1991 Stock Option Plan, as amended (the
"Plan"), is hereby amended as set forth below:
1. Section 1 of the Plan is hereby deleted in its entirety and
replaced by the following:
"The purpose of this plan (the "Plan") is to encourage key
employees, including officers, of IGI, Inc., a Delaware
corporation ("IGI"), and any present or future subsidiary and
parent of IGI (hereinafter collectively referred to as the
"Company") to acquire shares of common stock of IGI, $.01 par
value per share (the "Common Stock"), and thereby increase
their proprietary interest in the Company's success and
provide an added incentive to remain in the employ of the
Company. It is also the purpose of the Plan to grant options
to purchase Common Stock to Eligible Directors of IGI (as
defined in Section 4 of the Plan) and consultants and
advisors to the Company in order to enhance the Company's
ability to attract and retain the services of such persons,
to provide additional incentive to them and to encourage the
highest level of performance by them by offering them a
proprietary interest in the Company's success. The words
parent and subsidiary shall be interpreted in accordance with
Section 422A and Section 425 of the Internal Revenue
Code of 1986, as from time to time amended (the "Code").
It is intended that options granted under the Plan shall
constitute either "incentive stock options" within the
meaning of Section 422A of the Code, or "non-qualified
options," as determined by the Committee named in Section 3
of the Plan in its sole discretion and indicated on each
form of option grant (the "Option Grant"), and the terms of
the Plan and Option Grants shall be construed accordingly,
provided, however, that Eligible Directors and consultants
and advisors to the Company shall be granted only
non-qualified options."
2. Section 2 of the Plan is hereby deleted in its entirety and
replaced by the following:
"Subject to the adjustment provided in Section 9, the
aggregate number of shares of Common Stock of IGI which may be
issued and sold pursuant to options granted under the Plan shall
not exceed 1,900,000 shares of Common Stock, which may be either
authorized but unissued shares or treasury shares. Subject to the
adjustment provided in Section 9, the maximum number of shares
with respect to which options may be granted to any person under
<PAGE>
the Plan shall not exceed 100,000 shares of Common Stock during
any calendar year during the term of the Plan. For the purpose of
calculating such maximum number, (a) an option shall continue to
be treated as outstanding notwithstanding its repricing,
cancellation or expiration and (b) the repricing of an outstanding
option or the issuance of a new option in substitution for a
cancelled option shall be deemed to constitute the grant of a new
additional option, separate from the original grant that is
repriced or cancelled. If any options granted under the Plan shall
terminate or expire without being fully exercised, the shares
which have not been purchased will again become available for
purposes of the Plan."
3. The first paragraph of Section 4 of the Plan is hereby
deleted in its entirety and replaced by the following:
"Options to purchase shares of Common Stock under the Plan
may be granted to key employees (including officers and
directors who are employees) of the Company and consultants and
advisors to the Company. In selecting the individuals to whom
options will be granted and in deciding how many shares of Common
Stock will be subject to each option, the Committee shall give
consideration to the importance of an optionee's duties and
responsibilities, to his experience with the Company, to his
future value to the Company, to his present and potential
contribution to the success of the Company, and to such other
factors as the Committee may deem relevant. Subject to the
express provisions of the Plan and the form of Option Grant
incorporated herein by reference as from time to time
altered or amended, the Committee shall have authority
to determine with respect to each Option Grant executed
and delivered to an optionee the number of installments,
the number of shares of Common Stock in each installment,
and the exercise dates, and, to the extent not inconsistent
with the applicable provisions of the Code, if any, may
specify additional restrictions and conditions for
any Option Grant executed and delivered to an optionee.
Each incentive stock option shall expire not later than
ten years from the date of the grant of such option."
4. The third paragraph of Section 4 of the Plan is hereby
deleted in its entirety and replaced by the following:
"The date of grant of an option to an optionee under the
Plan (other than an Eligible Director) shall be the date the
Committee votes to grant the option, but no such optionee
shall have the right to exercise his option until the
Company has executed and delivered the Option Grant to
such optionee. Each option granted under the Plan to an
optionee (other than an Eligible Director) shall be
evidenced by and subject to the terms and conditions of
the Option Grant which is incorporated into the Plan by
reference as from time to time altered or amended."
5. The first sentence of Section 5 of the Plan is hereby
deleted in its entirety and replaced by the following:
"The price per share at which each option granted under
the Plan to an optionee (other than an Eligible Director)
may be exercised shall be determined by the Committee
<PAGE>
subject to the Provisions of this Section 5."
6. The last sentence of the first paragraph of Section 8
of the Plan is hereby deleted in its entirety and
replaced by the following:
"The Committee shall indicate on each Option Grant
whether an incentive stock option within the meaning of
Section 422A of the Code or a non-qualified option is
thereby granted, provided, however, that Eligible
Directors and consultants and advisors to the Company
shall be granted only non-qualified options."
7. In all other respects, the Plan shall remain in full force
and effect.
Adopted by the
Board of Directors
on March 22, 1995
A-14
<PAGE>
IGI, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY
The undersigned, having received notice of the meeting and
management's proxy statement therefor, and revoking all prior proxies,
hereby appoint(s) John P. Gallo, Edward B. Hager and Henry A.
Malkasian, and each of them singly, attorneys or attorney of the
undersigned (with full power of substitution in them and each of them)
for and in the name(s) of the undersigned to attend the Annual Meeting
of Stockholders of IGI, Inc. (the "company") to be held on Tuesday, May
9, 1995 at 10:00 a.m. at the offices of Hale and Dorr, 60 State Street,
Boston, Massachusetts, and at any adjourned sessions thereof, and there
to vote and act upon the following matters in respect of all shares of
stock of the Company which the undersigned will be entitled to vote or
act upon, with all the powers the undersigned would possess if
personally present.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY PROPOSAL,
THIS PROXY WILL BE VOTED FOR PROPOSALS l, 2 AND 3 AND AGAINST PROPOSAL
4.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY
IN ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a corporation,
this signature should be that of an authorized officer who should state
his or her title.
HAS YOUR ADDRESS CHANGED?
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
(1) Election of Directors
[ ] For
[ ] Withhold
[ ] For All Except
Edward B. Hager, M.D., John P. Gallo, Henry A.
Malkasian, Jane E. Hager, David G. Pinosky, M.D.,
Constantine L. Hampers, M.D., John O. Marsh, Jr.,
Terrence O'Donnell and Dick Cheney
If you do not wish your shares voted "For" a particular
nominee, mark the "For All Except" box and strike a line
through the nominee's name. Your shares voted will be
voted for the remaining nominee(s).
(2) To approve amendments to the Company's 1991 Stock
Option Plan (i) increasing the number of shares of
Common Stock authorized for issuance from 1,200,000 to
1,900,000, (ii) limiting to 100,000 the number of
shares for which options may be granted in any calendar
year to any one person and (iii) providing that options
may be granted to consultants and advisors to the Company.
For [ ] Against [ ] Abstain [ ]
(3) To ratify the appointment of Coopers & Lybrand L.L.P. as
the Company's independent auditors for the 1995 fiscal
year.
For [ ] Against [ ] Abstain [ ]
(4) To consider and vote upon a stockholder-proposed
resolution relating to the location of the Company's
annual meetings.
For [ ] Against [ ] Abstain [ ]
(5) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
RECORD DATE SHARES:
The Board of Directors recommends you vote FOR proposals 1, 2 and
3 and AGAINST proposal 4.
Please be sure to sign and date this Proxy. Date: ____________
__________________________ ______________________________
Stockholder sign here Co-owner sign here
Mark box at right if address change has been
noted on the reverse side of this card. [ ]
-2-
<PAGE>
IGI, Inc.
Wheat Road & Lincoln Avenue
Buena, New Jersey 08310
April 14, 1995
Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: IGI, Inc.
Definitive Proxy Statement
File No. 0-10063
--------------------------
Ladies and Gentlemen:
Transmitted herewith through the EDGAR system is the Notice of
Meeting, Proxy Statement, Proxy Card and IGI, Inc. 1991 Stock Option
Plan in connection with the Annual Meeting of Stockholders of IGI, Inc.
(the "Company") to be held on May 9, 1995. These proxy materials will
be mailed to stockholders of the Company on or about April 14, 1995.
The Company has wired $125 in payment of the filing fee to the
Commission's lockbox depository at Mellon Bank.
If you have any questions or comments, please contact me at
(609) 697-1441.
Thank you for your attention to this matter.
Very truly yours,
/s/ Kevin J. Bratton
-----------------------------
Kevin J. Bratton
Vice President and Treasurer
